Petro One Energy Corp. (TSX: V.POP, Stock Forum) said that the first horizontal well drilled by its farmout partner, a senior oil company, on Petro One's J10 property has discovered oil and appears to be a successful producer, having averaged 147.7 barrels of oil per day for its first 17 days.
The new oil well is producing from the Frobisher Beds, a porous limestone unit that is widespread in southeast Saskatchewan.
According to the Petro One Energy press release, under the terms of the farmout agreement, the farmee paid 100% of the drilling and completion costs, and Petro One has the right to convert its 10% gross overriding royalty into a 30% working interest in the test well within 30 days of receiving notice of payout.
Based on the excellent oil volumes recorded thus far, this new well should substantially increase Petro One's cash flow and daily oil production, and add significantly to the company's reserve base.
Petro One's partner now has 90 days from the rig release date to elect to drill a second well, to be spudded within 90 days after that.
The property can accommodate up to eight horizontal wells in the Frobisher, and four in the Midale.
Petro One plans to continue to build production and develop its assets with the drill bit, both with its own capital, and in collaboration with farm-in partners.
On Monday morning, Petro One was trading at $0.31 a share. The company has a market cap of $18.3 million, based on $58.9 million shares outstanding. The 52-week high was $0.71 and $0.17 respectively.